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Chidinma Okoro has been unemployed since she got laid off in September last year. Her husband’s previously thriving business has struggled for a few years. This made Mrs Okoro’s contribution all the more critical for the family. With school fees due, things had become quite desperate. She then heard about a friend who had sold some of her gold and received a handsome amount for it.

Mrs Okoro gathered three gold chains-one of them broken, two pairs of earrings, and one half of a pair, five gold pendants and some old fashioned pieces that she hardly ever wore. The dealer weighed up her haul and gave Mrs Okoro N360, 000.

She was overjoyed, as they now had enough money to take care of their immediate needs. It is at such economic crossroads that people often sell little used but valuable jewellery to help to settle their bills and debts.

For those who keep gold jewellery, selling it at this time is all the more tempting with adverts all over the Internet and with gold dealers beckoning. The offers are so appealing. Before you decide to go ahead, carefully consider some of these issues.

How much is your jewellery worth?

Unfortunately, many desperate consumers are getting fleeced. Adverts tend to publish phrases like “highest prices guaranteed”, “best prices paid”, “competitive prices” to attract clients; buyers often appear reluctant to reveal what they will pay per ounce or gramme of gold. There is usually a wide variance between a fair price and what the seller actually receives. Indeed, if you take gold jewellery of the same weight and karat to a number of dealers, you will be surprised at the number of different offers.

Have at least a rough idea of what your jewellery is worth before you approach potential buyers. Start by obtaining the current spot price of gold, to at least give you some idea of what to expect, otherwise, you run the risk of accepting a ridiculous offer that doesn’t really reflect the true value of your pieces.

Who will buy your gold?

Trade your gold through reputable and reliable jewellery dealers who have been in the business for some years; they are likely to be more transparent in their dealings as they have a reputation to protect. In the alternative, you can choose dealers with good customer ratings, or who come highly recommended by your usual jeweller or trusted friends.

Protect your gold Secure your expensive gold jewellery in a home safe, bank safe deposit box, or other protected location. It is a good idea to properly insure your jewellery for its full value so you have additional protection against loss from theft or fire. To do this, you will usually be required to purchase additional coverage from your insurance company through an endorsement. In this regard, be sure to keep receipts and any documents or certificates safely, with an additional copy stored on file or in an alternative location as an extra precaution. These will be important should you ever have to make a claim.

Is jewellery a good investment?

In the traditional sense of investing, a good investment is one which appreciates steadily in value over time. Jewellery is a bit like a new car; you tend to lose value the moment you drive it out of the car show room. Second-hand jewellery usually attracts much less than its initial value. The overall value of jewellery must also take into account more subjective elements, such as the design or style, fashion trends and the skill or workmanship involved in crafting the pieces. The mark up on jewellery can be so significant as all these elements are included in its cost. This all makes gold jewellery a very worthwhile gift, but not necessarily an ideal investment. One should thus be cautious when purchasing gold jewellery for investment purposes.

Research has shown that gold does add some stability to a diversified investment portfolio consisting of the traditional asset classes, including cash, bonds, mutual funds and stocks. Some advisors even go as far as recommending that a balanced portfolio should include between 5 and 10 percent allocation to gold. Commodity prices tend to be volatile and gold is no different so it is important to spread your risk.

There are various ways of investing in gold. These include: investing directly through the purchase of certified gold coins or sovereigns, gold bullion or bars, or indirectly through shares in gold mining companies, gold based mutual funds, or Exchange Traded Funds (EFT), which are a most popular vehicle for investing in gold. This provides a convenient way of owning the metal as you don’t keep physical possession of it, and as such do not run the attendant risks. Yet one has the flexibility of being able to sell and readily convert it into cash.

Investing in gold has been a widely accepted financial practice for thousands of years. In recent times, as investors all over the world have seen their asset values plummet, from real estate to stocks, it is no surprise that with gold hitting record levels of over $1,400 per ounce, even the most conservative and traditional investors have begun to look to this metal as a good alternative. Gold jewellery has been a convenient and enjoyable way to preserve wealth and is a means to transfer that wealth through generations in a form that has, not only monetary value, but significant sentimental value as well.

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